Okay, let's go to the convenience.

It is recording progress.

We're going to call it the finance committee.

The city of Celia.

And that's not appreciated.

Thank you, Mayor.

Councilmember the Barrow Swalton is absent.

Councilmember Agula.

Thank you.

And Mayor Gonzalez.

Thank you.

Okay.

So the record reflects a talk about regular president as well.

In case he wasn't liked.

So if you would make your announcement, Madam Court.

After each agenda item is presented, the mayor will ask for committee member comments and then take public comment.

You will have two minutes for your comment.

Okay, Captain Timer will appear for the convenience of the speaker and attendees.

Okay, we're going to move to our discussion item.

This is in regards to development impact fees.

We've got assistant committee development director Allen Schultz presenting this item.

Hello.

Afternoon.

Let's make sure you can see the presentation.

Okay.

And I hope that's not my two-minute timer because it definitely won't be.

Okay, so we're here today to talk about development impact fees.

We're going to go for the background and our approach to this topic, the different fee categories that were studied, the methodology we use to approach this item, a really important factor, which is market feasibility, and then some considerations as examples for the committee's review, and then we would love to get your feedback on this before it proceeds to council.

And so the approach for this item is really a balancing act.

We need to look at balancing between legally defensible fees and what's market feasible.

And in doing that, we're looking to maximize revenue that can help fund necessary infrastructure while also enabling development to occur.

And so to do this, we've had multiple consultants help us with this very technical topic, including NDS, who really worked on the next extended defensible fees, and then Bayer Economics who did the market feasibility assessment for San Leandro.

And then this is an item that implements the housing element.

The state requires that cities address the housing crisis by looking at issues that could prevent development, housing development in particular.

And fees is an item that came up as a governmental constraint for San Leandro.

So we pledge to look at our fees and to look at ways to incentivize all housing development and particularly affordable housing development for the state.

And so the fee categories that we looked at include reevaluating our park development fee.

That is the largest fee we charge residential development.

And we also evaluated several new fee types given our major capital needs.

So we know that we have aging facilities, we need to plan for new facilities, expanded facilities.

So we looked at community and recreation centers, library facilities, fire protection facilities, police facilities, and general government, like City Hall and the Corporation Yard.

And then we did not reevaluate our students and signals fees, uh, known as DFSI, which is charged to both residential and non-residential development.

That fee will be studied once our streets plans are updated.

And so we have an older streets document, and it wouldn't make sense to reevaluate those fees at this time.

You can't look at your citywide needs and think like, great, we can charge new development to pay for these facilities or infrastructure that the existing residents need.

That's not considered fair or legal.

And so there has to be a nexus to the fees offsetting the impact that the new development itself creates proportionally.

And so, in order to do this, we're really looking at the cost of our planned facilities that would serve new development, and then we're dividing that by our projected new development, which which would create the demand for those additional services facilities.

And the existing what we call service levels for our existing community members, those are applied to the new development.

So we're not we're not having status quo for our existing residents and then saying, oh, but we're gonna have you know the five-star version for the new developments, we're gonna charge them really high fees for that additional service level.

You have to extrapolate your current service level to the new population.

And then we get to the feasibility analysis, and so we hired the area economics to look at what types of development have feasibility challenges in San Leandro, and they looked at 10 different development prototypes, and they basically did pro forma models, and they looked at development feasibility in terms of residual land value.

So once you look at all of your soft costs, you get your project developed or designed, I should say, and then you move into construction and all your hard costs, the residual land value tells you if there's value for that proposal.

And in San Leandro, they evaluated the following development types in the blue in the bottom of the screen a variety of non-residential types as well as residential types.

And what BAE found is not a surprise to me as someone who works in community development and sees the trends of what's getting built.

What they found is that for residential, four-sale townhomes were the only feasible residential category in current market conditions.

Market rate multifamily has feasibility challenges, and so affordable multifamily has even more significant feasibility challenges, which is why, with the exception of the one market rate residential project that's about to be occupied, we are not seeing developers pulling permits and moving into construction for those development types.

We have seen some sustained interest for for sale town homes, and that tends to do with just the input factors for that product type, they tend to be more affordable to construct and they have a healthy sales price given the regional sales prices, and so there's still a profit to be made for that particular product type, whereas there's not a strong market for the other types of residential.

ADUs, accessory dwelling units tend not to be based on market factors, they're more about family need, equity in your primary dwelling.

So those are a little bit unique compared to these other residential types.